Conversations

Some time ago, I wrote about how much Facebook had added to my life.   It has permitted me to reconnect with old friends,classmates, and coworkers and stay abreast of family members (especially those with whom it is best for all concerned to stay connected from afar).  Yes, there are downsides to it--oversharing among them--but that is easily remedied by deleting someone from your feed.

Twitter is even better.  I now get much of my news through Twitter and it permits you to quickly flip through to articles and essays that may be of interest to you.   Even better, it allows you to join conversations with some really wonderful minds from your smartphone.  Its 140 character limit (which, sadly, Twitter is planning on relaxing) forces concision and pithiness.  I count it as a small victory if I am retweeted, favorited, or even answered by a public intellectual.

Last week, I was answered by Garry Kasparov, former world chess champion, writer, and anti-Putin activist, author of the new book, "Winter is Coming:  Why Vladimir Putin and the Enemies of the Free World Must Be Stopped."  

Kasparov tweeted:
Uh-oh, Kerry is talking to Lavrov again. Already Assad stays & Iran is at the table. By tomorrow he'll have given Alaska back to Russia.

I answered:
We're also working on giving back part of Arizona and California back to Mexico. Big downsizing plan. 

Kasparov responded:
Well, smaller borders are easier to protect! Very clever plan. 

Then someone else chimed in:
Crap, I live in Wyoming; better learn to speak French.

It's a brief, punchy exchange, laced with humor, but highlights in four little tweets, two matters of grave global concern:  Obama's decision to withdraw the United States from its traditional post-WWII role as a global power wherever and whenever he can, second, the simultaneous opportunity that Vladimir Putin is seizing to move into that vacated space.  

This is the genius of Twitter.  In a few sentences, three people were able to establish that we are all on the same page.  Without a long diatribe from any of us, it is a safe bet that we see the world vision of Obama and of Putin as unsettling and disturbing.    Twitter enabled me to connect with an important voice and share the fear that the simultaneous retreat by the U.S. and resurgence of  Russia may be the most dangerous threat to freedom and democracy since the 1930's.

Father of Finance

The University of Chicago is simply an amazing place.  Its economics department has spawned an astonishing 28 Nobel Prize winners.  So far this year, I have been able to hear presentations by four of them.  Last week was a special treat.  I was able to attend a Q & A presentation by Eugene Fama, 2013 winner of the Nobel Prize.   Known as the "Father of Modern Finance," Fama's work has been integral to modern portfolio theory and asset prices.  Fama's research is was the underpinning of the development of index funds.  He is churlish and a bit laconic but attending a presentation by Fama was like going to the oracle, especially since I missed his class when I was in business school (to be more precise, I ducked it as his reputation as a brutal teacher intimidated me).  He was known as someone that could bring math majors from top notch schools to their knees.

Here is a summary of Fama's quotes by topic:

"Too big to fail doctrine" -- an abomination.  Since the Continental Bank bailout, it has taken on a life of its own.  Banks now have a put option on us.   It makes their debt riskless.  Banks kick and scream like crazy if they are required to maintain more equity.

"Dodd-Frank" -- supposedly did away with To Big To Fail and prescribed and orderly wind down of large institutions.  Except that the Treasury Secretary has to approve it.  Good luck on that one.  No Secretary of the Treasury will approve such a wind down.

China --  Chinese data are basically junk.  We can't even produce good data.  We simply do not know how they are doing.  All signs point to a significant slowdown.  I don't know if it [the slowdown] is such a big deal for us.  The real question is when will a blowup happen? If you give people capitalism, they will want freedom.

Interest rates and the economy-  We need a much stronger economy to raise rates.  The economy is not strong.  New business formation is in the tank--- off 30% from the norm.  We have had eight years of regulation and more regulation.  Now firms need a big compliance group. Technology has been relatively unregulated and more students are finding employment there, but now government wants to regulate the internet.

Performance of other asset classes--  There is no real good data on real estate. With private equity, data is skewed.  Only the ones that have done well want to giver you data.

Behavioral economics-- Behavior is what economics is all about.  Does it mean that it is irrational behavior?  You need to show me a way to document it in behavior.  It's very expensive to collect data.  

On Richard Thaler-- If he would give me things in testable form, I would collaborate with him.  I always challenge him, "Do you want to document that?"

On Big Data--I don't know what the fuss is.  I've been doing Big Data all along.

On where his research is going--If I knew where it was going to go, I would have gone there already.

It is one of my great regrets that I did not take his course.  I would have had to work like a dog and stress and strain to get a "C" but it would have been a C I would wear like a badge of honor.

Pawn Sacrifice

The Bobby Fischer/Boris Spassky world chess championship in the summer of 1972 was one of the most followed sports dramas of the Cold War era.   The film Pawn Sacrifice by director Edward Zwick (Glory, The Last Samurai) recounts this epic battle that pitted the best of the Soviet system against an enigmatic and mercurial young prodigy from Brooklyn.  Taking on the enormously difficult task of dramatizing the best of 24 game series and profiling the tempestuous and eccentric Fischer, Zwick largely succeeds in making a film that is at one time a Cold War drama, a character study and a time piece.  Tobey Maguire clearly spent a great deal of time studying Fischer, and nailed his mannerisms, gait, and irascibility and Liev Schreiber portrays the confident, more dashing Boris Spassky with real panache.

Bobby Fischer was one of the most interesting figures in American popular culture of the 1970’s.  Raised by a single mom (who was under investigation by the F.B.I. for her subversive activities), Fischer turned to chess at an early age (likely in part as a distraction from his broken home) and learned to play on his own and through hanging around his local chess club in Brooklyn.

Chess in the Soviet Union is its national pastime and Boris Spassky was a product of the Soviet chess system, which identified, culled and trained chess players, and consequently, the Russians dominated the chess world for decades.  The matchup was a classic battle between an American maverick and a representative of the collectivist system.  The Soviets played chess as a team sport and Fischer accused the Soviets of colluding at tournaments.

Fischer’s obsession with the game propelled him to become the youngest grandmaster at age 15 and the youngest U.S. Chess Champion at age 20, propelling him into the national media spotlight in the late 60’s and early 70’s.  Seemingly overnight, the socially awkward Fischer became a national sensation.  His stardom spawned a boom in chess, as chess clubs flourished across the country and chess sets flew off the shelves.

The East and West could not fight a hot war without destroying themselves, so they fought proxy wars in other countries, competed for dominance in space, and in 1972, their representatives battled in Reykjavik on a chess board.  Pawn Sacrifice captures this high drama and the vaulting of an unlikely temperamental nerd from Brooklyn to media star.  After losing the initial game, and forfeiting the second because of one of his recurring tantrums over playing conditions, Fischer went on to beat Spassky.  While there was no blood, bullets or guns on the screen, Zwick makes this confrontation every bit as riveting as his other war films- The Last Samurai and Glory.  Interestingly, a couple of months later, Team Canada beat the Soviet Team in the other source of Soviet pride –hockey--in a come from behind effort in their Summit Series. I can’t help but wonder if those two events were a foreshadowing of the collapse of the Soviet Union.

Pawn Sacrifice ends as abruptly as Fischer’s stardom and spends only a few moments on the end game—Fischer’s disappearance from competitive chess and the entire national spotlight (and re-emergence in 1992 to take on Spassky in a rematch), his vagabond existence and his deteriorating mental health.   If you are interested in filling in the missing parts, read “Bobby Fischer Goes to War: How the Soviets Lost the Most Extraordinary Chess Match of All Time,” by David Edmonds and John Eidinow.

The puzzling, contradictory figure of Fischer is perhaps best captured by my two favorite quotes by Fischer.  His steely, cold competitiveness was revealed by Dick Cavett (Cavett himself suffered from bipolar disorder) when Cavett what gave him the most pleasure in chess, Fischer responded, “The moment when I break my opponent’s ego.”  Yet this same solitary and reclusive Bobby Fischer’s last words on his deathbed were, “Nothing is as healing as the human touch.” 

Fischer belongs in that pantheon of genius talents such as John Nash, Vincent van Gough, and Jack Kerouac that were simultaneously given a remarkable gift and a curse to a high degree and Pawn Sacrifice excellently portrays Fischer as a troubled front line soldier in the Cold War that defeated the Soviets on a bloodless battlefield.

Summer of Disappointment

As summer winds down and transitions into autumn, I was thinking of an adequate summary of the summer of 2015, as each summer has its own hallmarks and events that make it special and memorable.

But candidly, there is no other way to appropriately label the summer of 2015 other than as the Summer of Disappointment.

Early, in the summer, I joined a group of old friends at Ravinia Park, the local summer outdoor music venue to see The Doobie Brothers (who was at the height of their popularity during my teen and preteen years), to enjoy friendship, a little wine, music and nostalgia.  The weather was more suitable to a November football game at Soldier Field, as we were huddled under jackets and blankets.   The band was late at an already late start time,  and they sounded old, tired, and flat, sounding more like a bad local band playing China Grove at a wedding than the actual Doobie Brothers.  I left after about four songs.  That set the tone for the summer.

Baseball also disappointed.  My beloved White Sox were a flop.  Several off season acquisitions were made to complement starts Chris Sale and Jose Abreau and most baseball writers had predicted this team to contend for a division title.  I was looking forward to several nice summer nights at the ballpark with my son, cheering the team on during the 10th anniversary year of their World Series victory.  The team came out of the gate losing four straight and never really gained any traction.  Adam LaRoche decided to challenge quarterback Jay Cutler for the title of "Biggest Waste of Money in Chicago Sports History." A team that should be in the playoffs is now practically giving away tickets through its app just so there is not a resounding echo in the ballpark every time a player gets a hit.

The other big sports disappointment was, of course, Patrick Kane.  He seemed like he had matured and there were no reported incidents of his drunken frat-boy-like behavior over the last few years until this summer when Kane got himself tangled in a whopper of a problem, being accused of rape at his Buffalo home by a woman that he picked up in a bar.  No charges have been filed yet, and these cases are very difficult.  At worst, he is a violent criminal and may go to jail.  At best, he showed terrible judgment, a penchant for recidivism, and he put himself, his team, and the sport in a terrible position.   It may very well be that Kane has played his last game for the Hawks.

In politics, despite a horde of candidates that threw their hats in the ring, I was certain that Scott Walker would quickly emerge as a front runner.  Nonpoliticians like Donald Trump typically make noise but inevitably sink as things get more serious.  Walker was conservative, tough, survived difficult campaigns and a recall and took on and defeated a rabid public union that threatened to turn Wisconsin into a mobocracy.   He restored fiscal sanity to his state and stood in stark contrast to Illinois, which can't even pay its lottery winners and is bleeding jobs and population.  But as the summer wore on, Trump's brash style continued to dominate the press.  Walker's adjustments made him look more like the Republican establishment of Boehner and McConnell and his support in Iowa plummeted to 3%.  Most ridiculous was his assertion that building a wall at the Canadian border was a legitimate issue.  Of all the serious issues facing the U.S., keeping those crazy Canucks out is not an issue that keeps most Americans awake at night.

In the literary world, the long-awaited, much ballyhooed sequel to To Kill A Mockingbird was set for release this summer.  TKAM is on the list of many readers' top ten most beloved novels.  The reclusive Harper Lee refrained from any other publications for decades, and there was much mystery surrounding her and the true authorship of TKAM remained subject of some speculation, given her relationship with Truman Capote.  Social media was abuzz all summer prior to the release.  At release, it was the fastest selling book in HarperCollins history as fans of TKAM gobbled it up.  But as readers dug in, the reviews came back with such descriptions as, "money grab," and "fraud" as some booksellers offered no-questions-asked refunds and others labelled it an "academic curiosity."  Go Set A Watchman landed with the biggest thud in literary history.

Even nature disappointed this summer.  The Chicago Botanic Garden splashed news about the blooming of the famous corpse plant (famous to botanists, anyway).   Spike, the corpse plant evidently infrequently blooms and when it does, it emits a strong and foul smell designed to attract insects.  The CBG attracted 57,000 visitors for the event, had news updates, planned to keep the garden open until 2 a.m. and had a live cam set up for people to watch over the internet.  But Spike never bloomed and horticulturalists deemed it to be "past its prime."   Despite Spike's failure to perform, there were no calls for research into a botanic Viagra.

Lest you think I only indict others in this list, I am not exempt.  Summer whizzed by without accomplishing many of the things that were on my list on Memorial Day.  The Wright Brothers by David McCullough and Misbehaving by Richard Thaler still rest upright on my shelf, unread.  The long list of cultural events and institutions that I wished to see only have two checkmarks next to them.   And although I made a mad dash at the end, I barely dented the catalog of house projects that needed to be done--the basement is still full of useless junk.  Oh, and a few pounds of the 15 that I vowed to make disappear are still here, ready for the holiday add-ons.

Life is Short--Beware

A friend of mine called me the other day with the assertion that the Ashley Madison (AM) hack and the disclosure that 37 million people were on the hunt for extramarital relationships was yet further evidence of the decay in our moral structure and decline of our civilization.  He is convinced that we have descended into a modern Sodom and Gomorrah and, as a result, the end is just around the corner.  This rampant frolicking was so widespread, he believes, that either the 2nd coming is imminent or that a large proportion of Western Civilization and some parts of the non-Western world will surely be turned into pillars of salt.

My response? Nah.  The AM hack and disclosure evidences nothing really new, and my view is being borne out by the data.  Certainly, the website and technology purporting to facilitate tawdry meetings caused a stir, but not much actually seems to have happened.  Here is why I am not particularly surprised or shocked by any of this.

• Infidelity is not new.  It has been around a long time.  While good data is hard to come by (yes, people are untruthful about it), there is not much evidence that unsavory behavior is increasing.  In fact, if infidelity did not exist, the entire country music industry would crumble (My personal favorite: "My Wife Ran Off With My Best Friend, and I Sure Do Miss Him").
• The disproportionate incidence of men engaging in this is also not new. Men, by nature, are more prone to wandering than women (or at least they are much less surreptitious about it).  Cher cleverly once observed, "Husbands are like fires--they go out when they're left unattended." The preliminary data summary I read showed that 83% of the 37 million registered on AM were men and of the women registered, between 2,000 and 12,000 actually read emails.   In fact, the hackers themselves complained about the number of fake female profiles (as a side note, it's always amusing to see criminals whine about someone else's fraudulent behavior).  But given those tiny numbers of women that answered emails, one can logically infer that the numbers of actual meetings and physical encounters were infinitesimally small.  
• Men being stupid about sex and having out-of-the-mainstream sexual predilections and affairs is certainly not new.  You don't need to look any farther than Bill Clinton, Anthony Weiner (you can't make up a more perfect match between his name and his habits), Gen. David Petraeus and Dennis Hastert in more recent times to Alexander Hamilton in days of yore (who had an affair with a married woman), to know that prurient behavior outside marriage was not invented with the dawn of the internet.

Sexuality is at the core of our human existence yet good data and serious scholarship on human sexuality are relatively rare, mostly because most people are remarkably secretive about this fundamental aspect of their lives.   Edward O. Laumann at the University of Chicago has done some good work (Sex, Love, and Health in America and The Social Organization of Sexuality) and his work is the most comprehensive since McKinsey.  Daniel Berger wrote an interesting book, What Do Women Want? a few years ago that contains some interesting findings on women's sexuality. And for some scientific insight of sexuality on the neurological level, David Linden published a fascinating book, The Compass of Pleasure.  But there is little of substance outside these works that tell us of our habits and norms.   We keep most of the details of this part of our lives out of the sunlight.  

The AM hack spilled some of these details out.  The hackers disseminated lurid thoughts and preferences and identified individuals attached to them in a format that is accessible to the public.  W. Somerset Maugham once somewhat famously observed, "My own belief is that there is hardly anyone whose sexual life, if it were broadcast, would not fill the world at large with surprise and horror."   Similarly, the themes of Nobel Prize winning novelist Mario Vargas Llosa's novels often dealt with a person's "public self," "private self, and "secret self."  The AM hack simply exposed what some great writers have known all along.

None of this is to signal my approbation of AM as a business model or to condone the behavior of those that registered, but I believe that the potential consequences will be largely overblown.  The AM hacking reveals nothing new about human nature.  It should shock no one that many, many people have messy, complicated, and often unfulfilled lives and often behave badly. But the AM hack, along with those of the Office of Personnel Management, Defense Department and other commercial hacks show us how vulnerable and lasting information is once it is put in electronic form. Addressing security in this part of our new infrastructure is an initiative in which this current administration has shown little interest.  Our government, power grid, and financial infrastructure remain highly vulnerable to hackers.

Yes, the hack has caused a lot of red faces and anxiety among those who were registered on AM, and smug jokes from people who weren't.  Ironically, the AM data dump occurred on the same week that the FDA approved a drug to enhance women's libido.  So at a time when women have the potential to have their interest elevated, many will be supremely furious at their husbands.

In the end,  my prediction is that the fallout is likely to be fairly small and contained to a handful of incidents.  I hope there will even be some positive outgrowths from this.  People will be much more careful about their online interactions (including financial ones) and hopefully it will spur institutions and businesses to radically beef up their cyber security. The AM situation does not portend the end of Western Civilization.  It is not likely to bring fire and brimstone down upon us.  It merely highlighted two immutable constants of the human condition: human frailty and an overly optimistic confidence in technology.

We should have learned those lessons from the sinking of the Titanic.

In The Game - the more things change...

I had an opportunity to attend the premier of In the Game, a film produced by the same company that produced Hoop Dreams.  This film held special significance for me, however.  It focused on the girls' soccer team at Kelly High School, a  Chicago public high school I attended nearly 40 years ago.  At the premier, I was also able to meet and speak with the producer, the principal of the school, and the coach and players that were featured in the film.  A large part of the experience was a nostalgia trip. While the ethnicity, sport, and gender were different, the struggles of trying to be an student athlete, in an underfunded school with few resources in blue collar, immigrant neighborhood resonated with me.  The film centered on these beautiful, spirited young women, trying to make something of themselves, using soccer to build the life skills needed to succeed in life and transcend this tough, poor, gritty (and now gang infested) neighborhood.  The movie struck a chord of both empathy for the girls and a deep sense of nostalgia.

The film did a great job of depicting the Brighton Park neighborhood and highlighted it as an immigrant gateway, showing the transition from a primarily Polish and Lithuanian enclave to a Mexican one.  The houses and parks still looked very familiar to me decades later, although most of the stores have changed and the red, green and white colors of the Mexican flag adorn many of them and many houses have symbols of Catholicism both inside and outside their homes.  The neighborhood is appreciably poorer (the head of the Brighton Park neighborhood council asserted an 86% poverty rate).  Many of the manufacturing companies that supported families in the 50's, 60's and 70's have moved out.  It appears that many people support themselves with little micro businesses and retail shops.  Of course, the other significant change since I grew up is the infiltration of gangs and gang violence.  Just last week, there was a gang related killing at 47th and Western, just a few blocks from my home.  And the film noted that the soccer team was forced to change practice fields because of the threat of gang violence.

Still, I couldn't help feeling a connection with these athletes.  One girl noted, "When I am on the field, everything else disappears."  It was inspiring to see these girls battle through family difficulties, poverty, and lack of infrastructure and resources to work hard and play hard every day.   In the suburbs, similar girls start with travel soccer, have personal trainers, and sometimes tutors.   These girls have to do it largely on their own grit and determination and a very devoted and dedicated coach.   Most of the girls at Kelly do not have money to go to college and have to rely on aid, loans and part time jobs.  It's very difficult for any to go straight through to a 4 year college.  It appears most start and stop through community college.   You can't help but cheer for these girls, any one of which you would be proud to have as your daughter.  The coach, a Kelly graduate of Polish heritage is a both a beacon of hope for these girls and a bridge between generations and waves of immigrants. His unyielding optimism and can-do spirit clearly infects his players.

Of course, as Orwell put it, "all art is propaganda," and this film has a political message to it, both in terms of immigration policy and school funding.  Some of the girls are undocumented and Kelly was subject to pretty draconian budget cuts.  Ironically, the very next day, the Chicago Tribune ran a long piece on the financial condition of the Chicago Public School system and the gross financial mismanagement of it and its pension system.

These girls deserve so much more.  It is heartbreaking to see them caught in a system that was largely constructed and run for the benefit of the unions and politicians and not for the kids.  But simply giving more money to a broken system will not solve the problem.  Twenty percent of funding now goes to pay pension costs and service debt.  That leaves precious little for aspiring student athletes like these girls.

The film underscored for me that the system needs radical reform, not just meddling at the edges and taking holidays from payment into the pension system.  The system needs to go into bankruptcy, with material adjustments to the union contract (so bad teachers can be fired more easily), the pension system, "sweetheart" contracts, and the like and the system needs to be rebuilt under court supervision.  That is the only way I see these kids getting a fair shake.

The filmmakers did a good job of evoking an emotional reaction--it is what good films do.  But the solution that has a chance at fixing the problem may be different than the one they intended.

Best of Enemies

I was seriously misled by the title of this movie. 

There are several progressive friends of mine with whom I engage in verbal and email debates, and while these engagements can be quite spirited and heated and occasionally devolve into mostly good natured potshots at each others’ arguments and selective treatment of factual information to support arguments, we remain friends.  This is kind of relationship between William F. Buckley and Gore Vidal that the title of the film about the debates between them during the 1968 conventions suggested.

It couldn’t have been farther from the truth.  I expected to see a film about two antagonists that ultimately respected each others’ intellect and liked each other personally.  While the former may have been true to some extent, Buckley and Vidal really did despise each other.  The true enmity between them dripped throughout the film.  Each man saw each other as dangerous and the embodiment of evil, and the antipathy that reached a crescendo  with Buckley threatening Vidal with physical assault on air, calling him a “queer” for calling Buckley a “crypto-Nazi.”  Later, Buckley sued Vidal for publishing an article that challenged Buckley’s sexuality.  This battle between titanic intellects got mean and personal.

The film contained three themes that made it a must see for those interested in public discourse:  the stark contrast and deep antagonism between these two men that has carried over into our divided politics today, the debates were a timepiece of history and media (there were only 3 major networks), the explosive Democratic National Convention was going on, and the Vietnam War and perceived breakdown of law, order and social mores was occurring.  But the last, and in my mind, not least important,  theme enveloped me in sadness—to see these two powerful intellects wane in terms of influence and sink into old age and death.  In particular, I was taken by Buckley’s statement near the end of his life that, if given an opportunity to take a magic pill that would make him 25 years younger, he would decline, and that he was “tired of living.”  Likewise, you could feel the pain that Vidal felt toward the end when he realized that “no one reads his books anymore,”  after toiling for a lifetime and pouring his soul into them. 

This film was significant for me.  Bill Buckley had a strong influence on my thinking when I was a young man and inspired my intellect.   Best of Enemies gave me an opportunity to see a side of him that I had not seen before.   While I had lionized Buckley, the movie showed a human side of WFB that I had not seen before and  suggests strongly  that Vidal ultimately prevailed in this contest, primarily because Vidal had gotten under Buckley’s skin so badly that the usually controlled and affable Buckley threatened him.  Buckley himself  recognized  that this incident was not a shining moment in his career. 

But I have a different view.  While Vidal certainly left behind a larger body of written work, Buckley’s intellectual and political influence was much wider.  He was certainly a factor in the election of the most significant political figure in my lifetime-Ronald Reagan, a president even Barack Obama tries to compare himself to.  Reagan’s conservative core has spawned a new generation of politicians that carry his banner—Scott Walker, Marco Rubio, Ted Cruz and Mike Pence, all hoping to emulate him.  Vidal did not carry that much influence.

Unfortunately, conservatives have not yet found a person that is capable of serving as the intellectual standard bearer.  Laura Ingraham and Mark Levin have some following.  Neither has the intellectual depth.  Perhaps the nearest to Buckley’s intellectual level is Charles Krauthammer, but Krauthammer does not have Buckley’s charm or wonderfully biting sense of humor.

Perhaps there will never be another.